Mahmut Barlas / Corporate Support
Republic of Turkey Ministry of Trade ("Ministry") made an announcement on 31.03.2020 to the Union of Chambers and Commodity Exchanges of Turkey ("TOBB") about the dividend distributions to protect the equity of corporations due to the Covid-19 virus and requested it to be forwarded to all companies. Accordingly, TOBB sent a note on 01.04.2020 to all chambers and stock markets regarding the limitation of dividend distributions in capital companies.
It is obligated to put the issues on the agenda that are requested to be discussed by the Ministry at the general assembly of the Company in accordance with Article 13/5 of the Regulation on The Customs and Trade Ministry Representatives ("Regulation") that has been published in the Official Gazette dated 28.11.2012 and numbered 28481. In accordance with this article, capital companies are obliged to take the mentioned topics in the announcement to their agenda in in the general assembly’s that will be held in year 2020.
With the announcement that has been mentioned, the Ministry requested from capital companies (Jointstock Companies, Limited Companies and Capital Shares), excluding state-owned companies in the dividend distribution decisions topics stated below to be included in the agenda of the general assembly meetings to be held this year regarding the fiscal year 2019:
According the relevant article of the Regulation, it is required to discuss issues on the agenda that are requested by the Ministry but it is not obliged by the companies to decide against Ministry announcement.
As a result, the adverse effects of the Coronavirus on the economy can be seen in both real person and company legal entities. Therefore, it can be seen that the Ministry’s motivations behind issuing this advisory announcement is to protect the actives and passives of corporations, underlining the Turkish Commercial Code’s Article 376 which regulates “The loss of capital, state of debt”, and preventing this situation through the restriction on dividend distributions.
For these reasons, we believe that limiting dividend distribution would be beneficial for the companies.
Should you require any further clarification, please do not hesitate to contact us.
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